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Why Vuzix Corporation Popped 19% on Tuesday

By Brett Schafer – Nov 9, 2021 at 4:02PM

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The company just released its Q3 earnings.

What happened

Shares of Vuzix Corporation (VUZI 2.12%) popped as much as 19% on Tuesday after reporting earnings for the third quarter. As of 3:29 EST, the smart glasses and augmented-reality (AR) company's stock was up 12.6% on the day.

So what

On Nov. 8, Vuzix reported its earnings results for the third quarter. Revenue and earnings per share (EPS) came in at or below expectations. Vuzix had a net loss of $0.13 per share, which was right in line with analyst expectations for the quarter. Revenue was $3.02 million, off substantially from the $3.79 million analyst estimate.

A person wearing smart glasses.

Image source: Getty Images.

Why was Vuzix stock up so much today? Because of management's bullish guidance for Q4 and 2022. In Q4, Vuzix is expecting sequential revenue growth from Q3 as it continues to grow its smart-glasses deliveries. In 2022, the company is expecting to release four new smart-glasses products. These announcements/expectations likely had investors in Vuzix bullish after reading the report.

Now what

Vuzix is going after a large market opportunity, with the AR industry poised to grow substantially over the next decade. However, with only $3 million in quarterly sales and low gross margins of 19%, Vuzix doesn't have much of a business right now, even if it's producing some revolutionary technology.

With a market cap of $862 million, Vuzix stock presents a very risky investment opportunity, as the company will need to grow substantially from here in order for this valuation to make sense. 

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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